ANZ reduces savings and term deposit interest rates

ANZ reduces savings and term deposit interest rates

ANZ has shaved rates on some of its savings and term deposit accounts, as savers continue to feel the pinch from low interest rates.

Term deposit holders are likely to be hit harder, with bigger interest rate cuts made to the big four bank’s term deposit accounts than its savings accounts.

ANZ trimmed 15 basis points off two of its main savings accounts: the ANZ Progress Saver and the ANZ Online Saver.

The new maximum rate for the ANZ Progress Saver is 0.70 per cent, while for the ANZ Online Saver, it is 0.65 per cent.

ANZ Progress Saver

  Old rate New rate Difference
Max rate 0.85% 0.70% 0.15%
Base rate 0.01% 0.01% 0%

Note: To qualify for the maximum rate you need to make at least one single deposit of $10 or more in a month.

ANZ Online Saver

  Old rate New rate Difference
Max rate (including intro rate for 3 mths) 0.80% 0.65% -0.15%
Ongoing rate 0.05% 0.05% 0%

The bank also reduced its interest rates by up to 25 basis points on two of its term deposit accounts.

The ANZ Advance Notice Term Deposit has been slashed by between five and 25 basis points. 

The biggest cuts were made to the product’s three-month term option, now with an interest rate of 0.40 per cent.

On the ANZ Term Deposit, rates were lowered by up to 10 basis points. 

Parking money in this product’s 24- to 48-month term options have a return of 0.35 per cent, while the 60-month term deposit offers a 0.45 per cent rate.

Savings and term deposit rates plummet

ANZ’s changes, effective today, bring the average ongoing savings rate to 0.51 per cent, according to the RateCity database.

As mortgage rates continue to fall, banks continue to take an axe to their savings and term deposit rates.

While the highest ongoing savings rate six months ago was 2 per cent, today that has dropped to 1.60 per cent.

Contributing to this fall, 67, including all of the big four, have reduced its savings rates in the past two months by an average of 17 basis points.

And it’s not just savings account holders who are suffering. Savers locking away their funds in a term deposit are also seeing their returns slashed.

More than 80 banks have cut its term deposit rates in the past two months, with an average reduction of 12 basis points.

Big four banks chip away at rates for savers

About three quarters of household deposits are with a big four bank, according to the Australian Prudential Regulation Authority.

The big four banks have been chipping away at their main savings accounts over the past six months through a series of small cuts. 

Savers holding a standard savings account with a major bank are earning an ongoing rate of as low as 0.05 per cent, while big four customers with a conditional based savings account can earn up to 0.90 per cent.

The one exception is Westpac, which is offering a max rate of 3 per cent to Australians aged between 18 and 29 years of age. 

On average, the four major banks have lowered its savings rates by almost 10 basis points in the past two months, RateCity records showed.

Westpac Group shaved its savings rates in early September by up to 20 basis points across its subsidiaries, including St. George, BankSA, Bank of Melbourne and RAMS. 

More recently, Commonwealth Bank trimmed savings rates across its Youthsaver and Netbank Saver accounts by five basis points. 

All of the big four banks also lowered its term deposit rates in the past two months, by an average of close to 10 basis points.

Big 4 conditional savers over the last 6 months

  April 14th- max rate Today – max rate Difference
CBA

0.50%

0.50%

0%

Westpac

1.30%

0.85%

0.45%

NAB

1.25%

0.80%

0.45%

ANZ

1.00%

0.70%

0.30%

Source: RateCity. Notes: based on a balance of $50K. Does not include accounts with age restrictions. Westpac offers a max rate of 3% to people aged 18 - 29 years old.

Highest ongoing savings rates

Bank 13 Oct 2020 max rate
Up

1.60%

ME Bank

1.55%

Australian Unity

1.50%

ING

1.50%

MyState Bank

1.50%

Bank of Queensland

1.50%

Source: RateCity. Note: Accurate as of October 13, 2020.

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Learn more about savings accounts

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.